It’s that time of year that everyone remembers those three pesky letters – C.P.A. We are here to get you out of any tax issue, right?
Wrong!! The most common misconception facing my industry is that CPA is equal to tax person. Whenever I introduce myself as a CPA, they usually say “Oh good, I need help with my taxes.” Then, I have to quickly (and politely) tell them that I don’t do taxes.
I don’t blame anyone for equating CPA to taxes. Everyone has to deal with taxes – one of the two things we all have in common, right? And, guess who does do work on taxes – CPAs! But, what most don’t know is that this is only one part of our skill set and a lot of us (like me) specialize in something else. (And don’t remember much from our tax classes! – Sorry Dr. Jim Turner)
In this three part series, I’m going to try to break the down misconception and tell you more about what a CPA is, our basic knowledge set, and all the different things we can do with the certification.
First, let’s cover what a CPA stands for. CPA is short for Certified Public Accountant. We are here to protect the Public. But, from what?
In truth, you only need a CPA to issue audited financial statements for a company (or another assurance service – like review or compilation). We protect the public from a company issuing materially incorrect financial statements. Why does this matter? The public makes investing and financing decisions based on those financial statements, and it is our job to assure them as a third-party that we have tested these numbers and they are correct (within a certain materiality threshold).
So, it isn’t that CPAs are protecting the public from taxes, it is actually all about ensuring the financial statements are accurate. But, since our education spends so much time behind learning how to do accounting and prepare financial statements, it leads my profession into many different avenues beyond just auditing, like preparing taxes.
Now that you know what a CPA is, look out for our next post in our three-part series as to what basic knowledge every CPA has.